Wednesday, November 12, 2008

Trustees act to terminate the swaps

http://www.mas.gov.sg/news_room/press_releases/2008/Actions_Taken_to_Protect_Interests_of_Noteholders_of_the_Lehman_Minibond_Notes_Programme.html

IN A move to protect Lehman Minibond investors, the trustee HSBC Institutional Trust Services has taken action to terminate the swaps for series 1 to 8 notes in the programme, said the Monetary Authority of Singapore (MAS) on Wednesday.

'This removes the risk of credit events in the underlying securities and helps to preserve the value of the underlying collateral,' said MAS in a statement.

'This action is not necessary for series 9 and 10 as the underlying securities for these notes are corporate bonds and have no swaps.'

MAS said it has been informed of the steps taken by HSBC 'in view of the current market conditions'.

The statement said the trustee has appointed three partners from PricewaterhouseCoopers

Singapore (PwC) as receivers for series 5 to 8 which have defaulted since the relevant coupon payments were not made by the due dates.

The other series would also default if the relevant coupon payments are not received by the due dates and the relevant grace periods have lapsed.

The trustee would then appoint the three PwC partners as receivers for these series.

The receivers' role is to take control of the assets of these notes and to work closely with the trustee towards a solution which is in the best interests of noteholders, said MAS.

The trustee and the receivers have assured MAS that they have not ruled out any restructuring proposals received from interested parties and that these will be explored for all series of the notes.

To provide noteholders with an independent opinion on the options that best serve their interests, MAS has appointed Deloitte & Touche Corporate Finance Pte Ltd (DTCF) as an independent financial adviser on the Lehman Minibond notes programme.

MAS cautioned that restructuring the Minibond notes programme is a complex exercise which entails the agreement of several parties and resolution of challenging legal issues.

It would also need noteholders' approval.

'These steps will take time. The receivers would also have to take into account the risks to noteholders, including the continued credit and market risk to the underlying collateral,' said MAS.

'Hence, whether a viable restructuring proposal will materialise depends on several factors which are not within the control of the trustee and the receivers.'

MAS added that it understands that noteholders are anxious to know what they should do and what to expect next.

'At the moment, there is no action required on their part. MAS and the trustee will continue to keep noteholders updated on all developments including any options for them to consider,' it advised.

'MAS has asked the trustee to work towards providing noteholders with an update on whether restructuring is still a viable option by the end of the month at the latest.'

Mr Heng Swee Keat, Managing Director, MAS, said: 'MAS has been in close consultation with the trustee and receivers.'

'We believe that these are reasonable and appropriate steps for the trustee to take to protect the interests of noteholders given current market conditions.'

He added that the appointment of the independent financial adviser is also an important step to ensure that noteholders' interests are served'.

Mr Heng added: 'Our work on other fronts, on the formal inquiries and in seeing to the serious and impartial process of handling investors' complaints, is progressing. We will provide updates at the relevant juncture.'

29 comments:

Anonymous said...

A whole chunk that said nothing of

1. Compensation
2. Partial Refund
3. Material Value

That SAYS a lot.

Anonymous said...

Are the swaps terminated at the Minibond Notes level or at the underlying synthetic portfolio notes level?

Anonymous said...

Mr. Tan,
News from Business Times

http://www.businesstimes.com.sg/sub/latest/story/0,4574,305417,00.html?


November 12, 2008, 5.08 pm (Singapore time)

Lehman Minibond holders to get more clarity end-Nov: MAS

By SIOW LI SEN

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Lehman Minibond investors will have more clarity by the end of this month on their investment, the Monetary Authority of Singapore (MAS) said on Wednesday.


A statement from the MAS said it has asked the trustee, HSBC Institutional Trust Services (Singapore) Limited, to work towards providing note holders with an update on whether restructuring is still a viable option by the end of the month at the latest.

The trustee also today said it has terminated the swap in the underlying securities for Series 1 to 8 of the minibond notes programme.

The MAS said this removes the risk of credit event in the underlying securities and help to preserve the value of the underlying collateral.

This action is not necessary for Series 9 and 10 as the underlying securities for these notes are corporate bonds and have no swaps.

The trustee has also appointed three partners from PricewaterhouseCoopers Singapore as receivers for the notes.

The receiver's role is to take control of the assets of the notes and to work closely with the trustee towards a solution which is in the best interest of the noteholders.

Anonymous said...

"This removes the risk of credit events in the underlying securities and helps to preserve the value of the underlying collateral"....... Is this true? What is the implication? Any view please. Thank you.

Anonymous said...

Don't quite understand.
Is it good or bad? What are the implications?
Could any experts help please? Thank you.

Anonymous said...

not sure what does it all mean

Anonymous said...

Mr Tan,

Could you kindly explain further why by terminating the swaps for series 1 to 8 notes, it 'removes the risk of credit events in the underlying securities and helps to preserve the value of the underlying collateral'.

Appreciate your help and lead in this movement so far and hope that you take care of your health too.;)

Rdgs
Teo

checker said...

"terminate the swap"
what does this means ?
what is the impact on our investment ?

Anonymous said...

Lovely quotes


"Are the swaps terminated at the Minibond Notes level or at the underlying synthetic portfolio notes level?"

"this removes the risk of credit event in the underlying securities and help to preserve the value of the underlying collateral."

"don't quite understand.
Is it good or bad? What are the implications?
Could any experts help please? "

"not sure what does it all mean"

"Could you kindly explain further why by terminating the swaps for series 1 to 8 notes, it 'removes the risk of credit events in the underlying securities and helps to preserve the value of the underlying collateral'."

""terminate the swap"
what does this means ?
what is the impact on our investment ?"



Finally we are getting somewhere

Even tho we have ABSOLUTELY NO IDEA wheres that.

Anonymous said...

Dear all ,

Based on MAS’ statement :

1. Does it mean that MAS agreed with “high risk of credit events in the underlying securities for minibond series 1 to 8 “?
2. Does it mean that MAS agreed that minibond series 9 and 10 are invested in ‘low risk products ‘ like corporate bonds which have no swap ?

Hence the 'minibond series 1-8' are 'high risk products' because they have 'swap'.

For your information, the RMs of Hong Leong Finance recommended the minibond series ( lower than series 9 ) to their customers as “Investment grade bonds “. It is written in HLF’s document named ‘Collective Investment Scheme Recommendation’ and a copy given to the customers who bought the minibonds.

Hence, these HLF customers were misled by the RMs. The customers trusted the RMs to invest in ‘Investment grade bonds’, but it turns out to be ‘swap products’.

Concerned said...

Who is going to pay for the services of the receivers (PWC) and the independent financal advisers (Deloitte & Touche Corporate Finance Pte Ltd (DTCF)). This cost should not be borned by Minibond Ltd - series 1 -10 noteholders' funds. The Financial Institutional should be responsible for these costs.

Richard SIm said...

Even govt on FI side. Go to court no use. Judges are civil servants too.

Haiz. Already lost money. Don't want to spend more $$$..

End of the day, its the lawyers who laugh all their way to the bank. Hopefully the lawyers also buy minibonds later.

Anonymous said...

To 12.03
Stated in ST that MAS will pay for D&T services.

VS Lingam said...

Concerned,

I'm sure they will take it out from whatever measly amt is due to investors. MAS may appoint PWC and Deloitte, but the investor will be made to pay.

I's so disgusted with this whole saga. MAS and FIs can do whatever they like. As Clark Gable said as his parting shot in the movie Gone With The Wind, "Frankly my Dear, I don't give a damn."

VSL

Anonymous said...

MAS still don't get it.
They are still helping us by assisting the banks to close our cases quickly. They still think they are helping by giving us peanuts back or none at all. They still think they are helping by looking for alternate way out.

We don't want a way out as we are being cheated in intially.
What we complain is about mis-selling. We are sold one thing but it turn out to be another thing. We are being mis-led to think these are low risk product which are not.
We are complaining that MAS never protect us from harm in the first place.

We don't want these product in the first place.
We are being cheated to buy.
We are promised a safe product.
We don't want a high risk product.
We just want all our money back.
We want you to punish the FIs for cheating us.
Just ask the bank to pay up.

Hello MAS, the keyword from the start is mis-selling. Not alternate resolutions. Don't you get it?

Anonymous said...

Its not them who didnt get it.

Its YOU guys who still dont get it.

Get it?

Anonymous said...

I suspect the swaps counterparties of the underlying CDO could have defaulted..... that is why the swaps can be terminated??? Selective release of information?

Best regards
Confused

Anonymous said...

MAS just appointed more parties to cheat and share the remaining money of minibonds.

The noteholders did not agree to their appointment, did we?

MAS - Do something constructive to recoup our cheated money, not take more of it !!!

Anonymous said...

Dear Richard Sim,

There is actually a larger, more powerful court on earth - the COURT OF PUBLIC OPINION.

And, of course, the heavenly court above.

Anonymous said...

From understanding, there seems to be NO such Court of Public Opinion and Heavenly Court at the moment that is.


Rest assured, we will know there are once you get your REFUND.

Anonymous said...

Let's be fair to MAS and DBS. After all they claim to have trhe interests of the people at heart. In fact this is what the government also iterates, that it has the interests of the people at heart. Of course the interest of the people is a human, social dimension and different from the monetary interests that drive the greedy. As our government, MAS and DBS have the interests of the people at heart and are not greedy self centred tyrants we can all rest assure that the interest of the people will be at their hearts. Of course, I could be an idiot and have been conned by misrepresentations and misreadings. If that is so we have all been fooled. But I refuse to believe this because the implication will be dreadful!

Richard Sim said...

Dear anonymous 3.23pm, i have spoken to not one but many lawyers about this. Their advice is not to pursue as I will stand to lose more. I only put in $25K, the legal fees will easily be more than $25K if drag for a few years.

Plus all the medical expenses for high blood pressure as I am old. Who is going to compensate me?

Govt already said that we have to learn our lesson. I have been supporting PAP for my whole life and I've learnt through all my years as a Singaporean that it is wise to listen to the government. Look at all those people who go against our government, none have a good outcome.

Anonymous said...

"Dear anonymous 3.23pm, i have spoken to not one but many lawyers about this. Their advice is not to pursue as I will stand to lose more. I only put in $25K, the legal fees will easily be more than $25K if drag for a few years.

Plus all the medical expenses for high blood pressure as I am old. Who is going to compensate me? "



Senses.


(But NO COMMENT on the rest. Ahem.)

Anonymous said...

If terminating the swaps will help preserve the value of the minibonds, why was it not done earlier? What has HSBC been doing in its duty as a Trustee for the past many weeks?

Who will pay PwC as receivers?

I do not trust these financial institutions and MAS anymore. I do not trust they are acting in investors' best interest.

Anonymous said...

I have lost trust in these financial companies as well. I went to Mxxbank to do my FD, the lady promoted to me their credit card. Highlighted very strongly 10 years annual fee waiver and you get $100 on your 1st charge. I was wary after reading all these structured fiasco, told her I'll bring brochure/forms home. True enough, in the very small font fine prints it says there is charge of $2 each month for statement. That's $24 a year - equivalent to annual fee. Best of all, next time they can charge annual fee plus statement fee.

All these false selling still happening after the minibond, obviously MxxBank has moved to next target to earn their commision.

Banks are now like wolves in sheep skin. How can government allow them to set traps everywhere for unsuspecting common people. How can one trust banks any more?

Anonymous said...

Richard Sim,

From yr comment, "Look at all those people who go against our government, none have a good outcome." Just to borrow from the comment that investors walked into it with their eyes open, so the next time plse make sure you walk into polling station, with both eyes big, wide and open ! Let's see what happen in 2012 or S'porean really forgetful after getting a little money or rebate from gahmen before election.

Anonymous said...

I've also voted for the government all along, but will not anymore. On this one occasion when I needed their help, none came. MP did not even acknowledge my letter. The next time he come around in a smiling face, I'll slam the door in his face!

Anonymous said...

"I do not trust they are acting in investors' best interest."


You dont have to. They aint.




"Banks are now like wolves in sheep skin.


Investors you are like sheeps in wolf clothing, oh come on.




"The next time he come around in a smiling face, I'll slam the door in his face!"


The problem with pple on this Little Red Dot is, they do what they dont discuss, they discuss what they dont do.

Anonymous said...

Hi fellow "minibomb" investors, anyone of you know the exact underlying CDO for series 1-8? Just wanted to know how many credit event had happen in the portfolio...............

I agree with one of the author earlier; that the trustee should have terminated the swap agreement earlier (if to protect the value of the assets). Why only now?

I urge everyone of us to remember how our garmen/MAS react to this whole fiasco......the only way is to REMEMBER and tell them in 2012.

I use to defend our garmen with their policies etc etc; and the amt of $ that I lost is not a lot.....but the inaction and position that our garmen has taken thruout this fiasco is totally unreasonable and inhumane.... they have lost touch with the ground. You know how much more tax $ they make during the recent oil price surge? I don't know the exact amt and I am not saying that they should subsidise, but to maintain the same tax rate is like doubling of tax $. So much about understanding the suffering of the people.

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